Finance (No. 2) Bill (Second sitting)

Blake Stephenson Excerpts

Tuesday 27th January 2026 Public Bill Committees

Some of the issues I have highlighted have straightforward solutions, which our amendments address. The Government claim they want to simplify our tax system—the Minister and my hon. Friend the Member for Wyre Forest were hurrahing that earlier—and encourage investment in Britain, yet they produce legislation that is complex, sometimes retrospective and riddled with unintended consequences. We need tax law that is clear, fair and progressive, not a compliance minefield that catches the unwary while sophisticated advisers find ways around it. I listened carefully to the Minister’s response, in particular on the TRF issues that I raised, but my intention is to press my amendments.

[Blake Stephenson (Mid Bedfordshire) (Con)]

I will speak to amendments 1 and 2 in the name of my hon. Friend the Member for Windsor. The Government and those of us supporting the amendments are trying to achieve the same outcome. The aim of the amendments is simple: to enable the Government to achieve their goal of raising billions in tax revenues from former non-doms—money that is needed to pay for public services, as the hon. Member for Burnley said earlier.

The Government set out the policy intention to replace non-dom status with a UK residency tax to raise more tax from those with the greatest capacity to pay, while simplifying the system. They introduced the temporary repatriation facility—or, given that we like three-letter acronyms, the TRF—as the central part of that strategy. It is designed to encourage people to remain in the UK, to come to the UK and invest in the UK, and to bring historically offshore capital into the UK tax net. The TRF offers a reduced rate of taxation of 12% on all non-UK assets brought into the country as an incentive to do just that. We all want the same thing: we want the TRF to work, because if it does not, the money does not come here and the Exchequer and the public lose.

The Government are relying on the reforms to raise very substantial sums—about £34 billion overall. The concern I express is not ideological or about the tax rate; it is about legal certainty and deliverability. The problem is that a number of the wealthiest people have left the country, and many more are doing so as we debate these amendments. Why? Odd as it may seem, it is not because they are unwilling to pay more tax; it is because of the legal uncertainty in the Bill as drafted.

Using the TRF as set out in the Bill exposes people to serious legal uncertainty. First, they are subject to double taxation through double counting of the same economic value. Secondly, they are vulnerable to retrospective taxation. Thirdly, they face allegations of tax avoidance simply for using a scheme that Parliament itself has created. Fourthly, they expose themselves and their families to potentially decade-long investigations into arrangements that were entirely lawful at the time they were entered into. That is why they are watching this Bill proceed with their bags packed, waiting to see if it will fix the problems.

The advisers of such people are warning them to leave, but I know that the Government’s intention is not to drive them away. We need their taxes, fairly paid, to fund the renewal of our public services. That is why amendments 1 and 2 were tabled, in a constructive spirit of co-operation, as my hon. Friend the shadow Minister mentioned. Amendment 1 would stop double counting; and amendment 2 would ensure that retrospective and unfair action does not continue. Had amendment 49, which goes further, been selected for debate, I would have spoken to it as well, but I will resist doing so because it has not been selected.

Amendments 1 and 2 would provide the needed certainty and make the TRF usable in practice, not just in theory. I hope that the Minister can give me some assurance that the Government recognise some of the technical problems highlighted by the amendments and intend to resolve them. I noted earlier that the Minister rejected amendments 1 and 2, giving a brief reason why, but given the representations, certainly by the Opposition, a more detailed response as to why the amendments have been rejected by the Government would be worthwhile.

Much careful work has gone into the construction of amendments 1 and 2. Again in the spirit of co-operation, I am sure that Conservative Members would be happy to provide input to the Minister and officials as they consider how best to address the issues. With that, I commend the amendments to the Committee.

[Lucy Rigby]

A criticism of complexity has been made. The aim of these reforms is, of course, simplicity. I think it is recognised across the House that in matters of taxation, simplicity is better. We are ensuring that the legislation works as it is intended to do. The shadow Minister, the hon. Member for North West Norfolk, referred to the Chartered Institute of Taxation. It is important to note this quote from the institute:

“Moving from domicile to residence as the basis for taxing people who are internationally mobile makes sense.”

As well as being a major simplification, it is a fairer and more transparent basis for determining UK tax. Residence is determined by criteria far more objective and certain than the subjective concept of domicile. Replacing the outdated remittance basis is sensible, and the temporary repatriation facility offers a helpful transition.

Another criticism is retrospection. In this instance, the Government feel that a retrospective change is a proportionate response to protect revenue, which, as the hon. Member for Mid Bedfordshire said, is essential for public services. This change will prevent taxpayers from benefiting from unintended windfalls and promotes consistency in the application of rules, bringing the capital gains position into line with the income tax provision. In most cases, trusts will not yet have made capital distributions, meaning that beneficiaries and trustees will have advance notice and can plan their affairs.

A further topic that that came up is the reporting of every element of FIG. I have a note on that somewhere, so I will come back to it. I will deal first with the suggestion that restrictions on the TRF are arbitrary. The position of someone who is temporarily abroad arose. The TRF is designed to encourage people to be UK-resident and bring funds into the UK economy. Allowing non-residents to use the TRF would let individuals benefit from the reduced charge without living here or contributing to the UK economy, which would reduce the incentive to become or remain UK-resident.

As I said, I reject amendment 1 because there are already measures in place that prevent double counting. I have dealt with amendment 2. I want to deal with the reporting of every element of FIG, which I have a note on, as I said. [Interruption.] That is the wrong note. I will have to come back to that.